“We are putting more distance between us and the recession,” Pera said. “Interest from investors has continued to increase over the last few years, which is consistent with what we see throughout the Southeast. There has been particular interest from buyers seeking better yields here than in other peer markets.”

The market as a whole saw 25 sales totaling $184 million and 5,300 units through the end of the third quarter, according to data from CBRE, which was involved in a number of the year’s biggest multifamily transactions.

“There were a number of large transactions in the market this year, which helped boost overall sales,” Pera said.

In March, CBRE closed on one of the largest properties in the market, the 972-unit Country Squire Apartments in Cordova, for $49.2 million. The company also completed the sale of a two-property portfolio in Cordova in March, with the 238-unit Villas at Grays Creek and the 226-unit Carrington at Houston Levee closing for $44.8 million.

Downtown, CBRE closed on the 500-unit Riverset Apartments on Mud Island for $43.6 million in May.

“This year has been a very good year overall for multifamily and commercial lending,” said Frank Stallworth, president of the commercial and multifamily real estate division at Magna Bank.

Magna has completed $120 million in multifamily business this year, with approximately $50 million in new construction loans and roughly $70 million coming through its mortgage banking partners such as life insurance companies and Freddie Mac. That $70 million is split 50/50 on acquisitions and refinancing deals.

“There was very little new construction in 2010 and 2011, and it began to pick up a little bit in 2012. This year has been fairly robust through areas of the country where unemployment rates have come down because employment drives multifamily,” said Stallworth, who counts as many as eight projects that Magna has financed recently in the Southeastern U.S., including three projects in Memphis with loans of more than $10 million apiece.

“The market has cleared a majority of the distressed product, so Memphis continues to gain interest from a national audience.”

The number of new units coming online this year is up, with 833 units to be completed this year and an additional 1,130 planned for 2014, Pera said.

“This is still well below historical levels,” he said. “Most of the new supply is concentrated Downtown and along the 385 corridor from Hacks Cross out to Collierville. There seems to be enough demand for upper-end product to allow for the quick absorption of this product. Units delivered to date have been very well-received.”

Refinancing projects were hot a couple of years ago due to very low interest rates, but that trend has cooled.

“Refinancing has tapered off some,” Stallworth said. “But the fundamentals in multifamily have steadily improved over the past three years, and multifamily is really the property type of choice for investors right now.”

Typically, the bank can loan 80 percent loan-to-value on purchases and 75 percent LTV on refinancing.

“We are still an undervalued market for Class C, distressed properties,” Braden said. “We are starting to see more stabilized properties, as opposed to investors buying just to make a quick flip. Now we are seeing more three- to five-year holds, which are better for the Memphis market.”

Braden would like to see most of the worst blighted properties around the city torn down and replaced with different types of development.

“If we could get them down as quickly as possible, it would help with absorption and rental rates. Anything would be better than buildings that have been completely gutted and vandalized,” said Braden, who sees vandalism increasing to the point that many owners are now forced to hire security to watch over properties that are being renovated.

Stallworth said Magna has not shied away from financing well-maintained, well-occupied stabilized Class C properties, and that the bank has completed several such deals this year.

Overall for the market, multifamily occupancies improved this year, jumping from 91.8 percent at the end of 2012 to 92.4 percent by the end of the third quarter, according to CBRE’s Q3 MarketView report. Average rents hit $764 in the third quarter, an increase of 1.1 percent from last year, driven partially by increases in Downtown rents.

Next year is anticipated to be another strong year for multifamily.

“There are not many unusual negatives to overcome,” Pera said. “The market has cleared a majority of the distressed product, so Memphis continues to gain interest from a national audience.”